Friday, April 14, 2017

Economics Non-Think: Raising Prices Increases Demand

The economics profession is increasingly a cacophony of bizarre, frequently illogical, slogans.

One of the more absurd of these slogans is the concept of "rent-sharing" by an ongoing business.  The idea, broadly, is that company profits are actually rents in the sense that they are unearned and unresponsive generally to market forces.  This absurd notion was the outgrowth of "research" that purported to show that workers of similar talent receive widely different compensation depending upon the profitability of the businesses they work for.

The idea that similarly skilled workers make disparate compensation is, at best if true, a static, temporary, phenomenon.  But, more likely, this "research" outcome is simply another example of far-left academics in search of a nonsense "fact" that supports an ideology.  In this case, the ideology, by further stretches, extends to the minimum wage discussion.

Minimum wage laws say, among other things, that if a company wishes to pay an employee in skill training, as opposed to cash, it is breaking the law (and so is the employee, who wishes to gain skill training).  As everyone, not drinking the "progressive" kool-aide knows, low income folks do not have access to colleges and universities where all the "progressives" hang out.  Rich and upper middle class Americans (which constitute the demographic of the American "progressive") luxuriate in leafy colleges and universities and cruise their way into the employment world.

But, the poor don't have the luxuries that are provided to high income "progressive" college students and their mentors.  The poor often don't even have high school diplomas.  If they are going to learn a skill, it will have to be through on-the-job training -- an opportunity that "progressives" have fought to prohibit by law.

Using the bizarre notion of "rent-sharing," the modern "progressive" academic economist argues that divvying up profits between labor and capital is largely unrelated to market forces.  Thus, within wide limits, firms should pay much higher wages (in cash only, not skill training) to their lowest skilled employees.  It must be nice to sit in a plush office, making six figure salaries, with six months off every year and opine about what rights poor people should or should not have.

Why not let poor people decide for themselves?  Why, instead of cash payments, can't poor people have the same rights as these wealthy, "progressive" economists?  Why can't they work for peanuts while gaining job skills that will transform their economic status.  Why are "progressives" opposed to that?

"Progressive" economists increasingly substitute logic and sound research for a search for conclusions that fit their "progressive" narrative.  The "progressive" insistence on outlawing the right of contract to poor people through their insistence on minimum wage laws only serves to perpetuate inequality and limit opportunities for the poorest among us.  Meanwhile, the "progressives" sit back in luxury and feel good about themselves as they trample the hopes and dreams of the poor with absurd slogans and bizarre "research."

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